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Background information (you can skip this)

The average NSF (insufficient funds) fee in the US is $34. (Source.) Dipping below a zero balance can sometimes lead to hundreds of dollars in cascading NSF fees, which could then eat up some or all of a person's next paycheck. (Source.) In fact, part of the reason why banks can offer "free" checking is because they make so much money from NSF fees. (Source.)

My question

I could be wrong. But it seems to me that, when a US resident has an empty bank account and no overdraft protection:

  • Failed pre-authorized monthly ACH payments sometimes cause the bank to levy an NSF (insufficient funds) fee. (Source.)
  • Failed pre-authorized monthly Visa/MasterCard debit payments are probably less likely to trigger an NSF fee (though an NSF fee still can happen.)

Why is it that failed monthly ACH payments are probably more likely to trigger an NSF fee than failed monthly Visa/MasterCard debit payments?

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    "probably less likely" - citation needed. To the best of my knowledge, NSF fees are levied when you go into the negative, no matter how. That said, debit transactions require pre-authorization and can be declined, so you're less likely to go into the negative.
    – littleadv
    Aug 28, 2023 at 17:14
  • I'm not seeing anything in the linked site that indicates NSF fees are happening on Visa/MasterCard transactions, it mentions overdraft fees.
    – Hart CO
    Aug 28, 2023 at 17:18
  • @littleadv: I think your comment answers my question. Please consider posting your comment as an answer. Aug 28, 2023 at 17:36
  • @HartCO: Good catch! I took a second look. I don't see anything in the linked page either. I presume that customers without overdraft protection would get hit with an NSF fee instead of an overdraft fee in "authorize positive, settle negative" situations. But I am unaware of any source to back up my claim. Aug 28, 2023 at 17:36

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"probably less likely" - citation needed. To the best of my knowledge, overdraft fees are levied when you go into the negative, no matter how. That said, debit transactions require pre-authorization and can be declined, so you're less likely to go into the negative.

Also, as mentioned by others in the comments, NSF and overdraft are slightly different concepts. NSF is usually charged for bounced checks (in which case you don't actually go into the negative).

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